GBP/USD: trading plan for the US session on February 16 (analysis of morning deals)

You require the following to open long positions on the GBP/USD:

I focused on the level of 1.2033 when I made my morning forecast and suggested trading actions based on it. Let's analyze the 5-minute chart to see what happened. Following a minor decline in the value of the pound against the backdrop of an absence of statistics and in keeping with yesterday's trend, a false breakout emerged at the level of 1.2033, providing a great entry opportunity to buy. All of this led to an increase of approximately 40 points. Technically speaking, the second half of the day has not seen any changes.

The nearest support level of 1.2033 is still being protected by buyers as it completed its tasks perfectly earlier in the day. But buyers will have a much harder time during the American session because the upcoming batch of significant statistics on the United States is anticipated to be released. The market's direction will be determined by statistics on the number of construction permits issued and new foundations poured, as well as statements by FOMC members James Bullard and Loretta Mester. In the event of positive indicators and a pair decrease, buyers' activity will once again be seen around 1.2033. By analogy with what I previously said, I won't decide to buy GBP/USD at this level until after a false breakout. This will cause the area around 1.2079 to strengthen because the moving averages there are currently favoring sellers. I will only wager on the continuation of the movement of the GBP/USD up to the maximum of 1.2130 when fixing and testing from top to bottom of this range. A break above this level in the afternoon will open up growth opportunities to 1.2178, where I've set profits. The pressure on GBP/USD will rise if the bulls are unable to complete the tasks and miss 1.2033, which is more obvious. In this situation, I suggest against making hasty purchases and only starting long positions at the next support level of 1.1990 and only in the event of a false breakout. I'll buy GBP/USD right away only if it recovers from 1.1936 in the hopes of a correction of 30-35 points during the day.

For opening short positions on the GBP/USD, you will need:

Bear activity in the area of 1.2033 indicates that they are not in a hurry to force events. The US figures, which have been driving the pound down all week, are expected to come back into focus. The protection of 1.2079 is the only concern. A false breakout there would be a strong indication to sell the pair. A similar scenario will result in the opening of short positions and the decline of GBP/USD to around 1.2033. Buyers' plans for a quick return after yesterday's sale will be disrupted by a breakthrough and a reverse test of this area against the backdrop of strong data on the housing market and inflation in the United States, which should also not be forgotten. This will increase the strength of bears in the market and form a sell signal with a decline to 1.1990. The 1.1936 area will be the farthest target, and an update there will signal the continuation of the downward trend. I'll set the profit there. Everything could change once again if GBP/USD increases and there are no bears around 1.2079 in the afternoon. In this situation, the bears will retreat and wait once more for positive news on the US economy that indicates economic growth. Only a false breakout in the area of the following resistance level of 1.2130 provides a way to enter short positions. If there is no activity, I will sell GBP/USD right away at the highest price of 1.2178, but only if I believe the pair will fall back by 30-35 points over the day.

The CFTC has been experiencing a technical issue that has prevented the publication of new COT reports for more than two weeks. The most recent data is for January 24.

Both long and short positions were dramatically reduced in the COT report (Commitment of Traders) for January 24. But, given the difficulties the UK government is presently facing (fighting strikes and demands for wage increases while still attempting to achieve a continuous fall in the inflation rate), the current reduction was within an acceptable range. Yet for the time being, all of this is receding into the background as we await the meetings of the Federal Reserve System, whose policy is anticipated to be less aggressive, and the Bank of England, whose pronouncements are certain to keep an aggressive tone by raising the rate by 0.5% once more. All of this will have a good impact on the British pound, so I expect it to rise more unless something unusual occurs. According to the most recent COT data, long non-commercial positions declined by 6,713 to 34,756 while short non-commercial positions decreased by 7,476 to 58,690, resulting in a fall in the non-commercial net position's negative value to -23,934 from -24,697 a week earlier. We will continue to keep a careful eye on the economic indicators for the UK and the decision made by the Bank of England because such insignificant changes do not significantly alter the balance of power. In contrast to 1.2290, the weekly ending price increased to 1.2350.

Signals from indicators

MovingAverages

Trade is taking place below the 30 and 50-day moving averages, which suggests that sellers of the pound have returned to the market.

Note that the author's consideration of the period and costs of moving averages on the hourly chart H1 differs from the standard definition of the traditional daily moving averages on the daily chart D1.

Bollinger Bands

The indicator's upper limit, which is located around 1.2050, will serve as resistance in the event of growth.

Description of indicators